Dow Hit with $400M Jury Verdict

Dow Chemical Company conspired with other companies in a urethane price-fixing conspiracy and owes $400 million in damages to buyers affected, a federal jury in Kansas City, KS, has decided.

After a four-week trial, the jury returned its verdict Wednesday (Feb. 20) against the Michigan-based construction chemicals and coatings raw material producer, in a case that dates to 2005.

www.dow.com

Dow Chemical, a worldwide producer of chemicals for building construction and other industries, has been fighting an eight-year-long lawsuit alleging a price-fixing conspiracy.

U.S. District Judge John W. Lungstrum has not yet issued an order on the seven-member jury’s verdict, but the final judgment could potentially be tripled under federal antitrust law.

5 Companies Implicated

The federal lawsuit alleged that Dow and its competitors—BASF SE, Bayer AG, Huntsman International LLC and Lyondell Chemical Company—began fixing prices for urethane by 1999, in violation of federal law. The conspiracy was said to have lasted into 2003.

Dow was the only remaining defendant; all of the other companies had settled out of court long ago, in agreements that topped $100 million in all.

The plaintiffs—buyers of urethane-based products for the construction, automotive, appliance and furniture industries—were seeking $1.125 billion in damages from Dow, according to court documents. The amount represented a 13 percent increase from what the prices would have been without the conspiracy, reports note.

“The people of Kansas have administered justice based on the evidence,” plaintiffs’ attorney Joseph Goldberg told members of the media after the verdict was read.

spraypolyurethane.org

Purchasers of urethane-based products said Dow officials conspired with competitors to fix prices from 1999 to 2003.

At trial, plaintiffs argued that Dow executives fixed prices with leaders of the other companies during phone calls, meetings at hotels, and on golf courses, reports said.

Appeal Considered

The company has denied the price-fixing allegations since the outset of the case. It said that prices were discussed, but that there was never an agreement to fix them, reports said, citing closing arguments in the case.

Dow did not respond to a request for comment Thursday (Feb. 21) evening from D+D News. However, Dow spokeswoman Rebecca Bentley told Bloomberg that the chemical company was disappointed that the jury had found price-fixing conduct during part of the five years alleged and was “evaluating all of our options, including appeal.”

David Bernick, an attorney for Dow, told Reuters that the company would seek to dismiss the lawsuit in a post-trial motion.

Past Settlements

The chemical companies were first sued in federal court in New Jersey in 2005, according to court documents. The case, In re: Urethane Antitrust Litigation, was then transferred to Kansas City that year as part of a multidistrict docket involving more than 60 plaintiffs.

In 2006, Bayer AG agreed to pay $55 million; Huntsman International LLC agreed to pay $33 million in 2011; and BASF Corp. agreed to pay $51 million in 2011. Lyondell Chemical Co. settled without paying damages because it was under bankruptcy protection. None of the companies that settled admitted any wrongdoing.

I'm at a loss to understand why Dow would risk litigating this case rather than settling for relatively little cost, and probably admitting no wrongdoing. Can someone enlighten me?

Comment from peter gibson, (2/25/2013, 10:50 AM)

Very simple answer... the greed factor. The big corporations have millions to spend on
litigation.

Comment from John Fauth, (2/26/2013, 7:44 AM)

Peter, I have no doubt there's an element of greed in all successful companies. But I would think that same quality would cause Dow to be more judicious about the risks they willingly accept with that money once earned. On the face, it seems like an unacceptable risk/reward. I must be missing something.